May 21, 2010
-
Debit or Credit; Making The Choice, Pt.4
Making a case for debit.We've covered the benefits of using a credit card, now it's time to discuss what the benefits are of using a debit card. Most importantly, using a debit card can help keep you out of debt. Debit cards only allow you to spend what you have. Remember that old saying from days gone by, "if you don't have it, don't spend it." It remains true to this day. Unfortunately, credit cards are very tempting and many consumers don't consider the consequences when the credit card statement arrives in the mailbox during the heat of the purchase. Using a debit card is similar to using cash only without the dangers of carrying around a wallet full of cash. Most debit card transactions post immediately to your account but can sometimes take a day or two making it important that you record all transactions to avoid over-draft. If you're looking to cut debt, the debit card is for you.
Debit card usage can also be a quick and easy way to pay for small everyday purchases. Since they cost less to process than the credit card, retailers have less expense and hopefully passing down the savings to the consumer. We wait as merchants continue to lobby for new legislation that will give them the opportunity to negotiate better interchange fee deals as well as provide greater flexibility in marketing. New promotions could offer consumers added discounts and incentives for using debit card versus credit card at the cash register.
As it turns out, there isn't one easy way to answer the question debit or credit since both options have some valuable benefits. The bottom line is that consumers must act responsibly while using either the debit or the credit card. The amount of debt incurred and the added protections of credit clearly outweigh each other. Whether you choose debit or credit, keep track of your spending, check your card accounts regularly online, and avoid higher interest rates and penalties by always paying your monthly bill on time.